How to Dissolve an LLP in Alabama

by Marie Murdock
Consenting partners can dissolve an Alabama limited liability partnership.

Consenting partners can dissolve an Alabama limited liability partnership.

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An Alabama limited liability partnership, or LLP, is a form of partnership in which all partners can take an active role in the partnership, yet one partner is not responsible or liable for another partner's misconduct or negligence. When partners no longer wish to participate in the partnership, or pre-determined events occur dictating the end of the partnership, the partners may have to wind up affairs and dissolve the LLP.

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Consent of Partners

The parties may mutually consent at a point in time to dissolve the partnership. A well-written partnership agreement will likely establish the terms and conditions of the dissolution as well as each partner's rights upon dissolution, thereby making the process easier to effect. In the event that the partnership agreement fails to state the terms of the dissolution, the partners should reach an agreement as to the division of assets and liabilities to avoid a court-ordered division.

Winding up Business

When winding up business in preparation to dissolve the LLP, the partners should address the status of any outstanding contracts, such as leases, employment contracts or vendor/supplier contracts, determining the obligations of the individual partners after dissolution. They should also transfer real property assets and personal property assets such as vehicles. Partners should see that creditors are paid or that debts are assumed by individual partners. It is good practice to notify customers or clients of the pending dissolution.

Dissolution Documents

The partners must execute and file a statement of termination of the limited liability partnership with the probate office in the Alabama county where the partnership was formed. This statement must contain the name of the partnership, the date it was formed and other information deemed relevant based on the terms of the dissolution. The LLP must pay filing fees to both the county recording office and the secretary of state when submitting the statement. The probate office is responsible for transmitting the appropriate forms and filing fees to the secretary of state’s office.

Judicial Dissolution

If there is disagreement as to the dissolution among the partners, or the partnership is not operating in compliance with the partnership agreement, one or more partners may apply to Alabama's circuit court for judicial dissolution. If all partners cannot agree to a division of the debts and liabilities, the court may order the division.